BSA comments on Pre-Budget Report 2009

Wednesday, 9 December 2009 12:00 AM

Commenting on the measures announced by the Chancellor in the Pre-Budget Report today, Adrian Coles, Director-General of the Building Societies Association (BSA), said:

Stamp Duty
"It's disappointing that the Chancellor has not extended the Stamp Duty holiday for properties under £175,000. With the average house price now standing at £162,764 according to Nationwide Building Society, extending the holiday would have provided much needed relief to many first time buyers aspiring to get a foot on the housing ladder.

"Stamp Duty needs serious reform. We urge the Government to research how the system could be reformed to reduce the price distortions resulting from the current 'slab' structure of the tax."

Support for Mortgage Interest (SMI)
"We welcome the six month extension to the standard interest rate at which SMI is payable. SMI provides an effective alternative to other Government support for struggling homeowners. The Government should also extend the scheme to borrowers suffering a reduction in income and further review the scheme to provide greater certainty to borrowers in difficulty."

Corporate Governance
"The Government proposes the introduction of a specific governance code for building societies and other financial mutuals. We see this as building on the annotated Combined Code which the BSA already publishes for building societies - and with which there is a high level of compliance."

Bonuses
"The BSA regrets that our sector has been caught up in what should remain an issue for banks who are in receipt of Government funding.
Bonuses within the building society sector are transparent. Building societies voluntarily ask their members to vote on directors'
remuneration policy; this includes bonus policy. On average, at building society Annual General Meetings in 2009, 93% of members voted to approve directors' remuneration packages."

Level playing field
"It's encouraging that the Government states that it wants to strengthen the ability of mutual societies to compete in the future.
However, we are very disappointed that the Government has not addressed the distortions in the savings and mortgage markets caused by wholly and part Government-owned banks. It's time Northern Rock's 100% Government guarantee on all deposits was removed and steps should be taken to ensure NS&I does not unfairly distort the savings market."

~ Ends ~

Notes to Editor:

1. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 52 UK building societies.
Building societies have total assets of over £370 billion and, together with their subsidiaries, hold residential mortgages of over £245 billion, more than 20% of the total outstanding in the UK. Societies hold nearly £240 billion of retail deposits, accounting for more than 20% of all such deposits in the UK. Building societies also account for about 36% of all cash ISA balances. Building societies employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

2. Photographs of Adrian Coles are available from the BSA press office, or from the Association's website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

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